European stocks rose amid optimism about an agreement to raise the US debt ceiling

European shares started higher on Thursday, reflecting a sense of optimism on Wall Street, on the back of indications that Washington is close to reaching an agreement on raising the US debt ceiling and avoiding default.

By 0708 GMT, the pan-European STOXX 600 index was up 0.4%. Auto and technology stocks led the gains.

US stocks rose on Wednesday after President Joe Biden and Republican House Speaker Kevin McCarthy confirmed their intention to reach an agreement soon to raise the debt ceiling and avert a catastrophic economic downturn.

Volkswagen shares rose 2.6 percent, driven by the automaker’s plans to revamp its core brand with the aim of increasing efficiency and returns.

The stock was the biggest gainer on Germany’s DAX, which rose 0.9 percent to its highest level in a year and a half.

Deutsche Bank AG fell 1.3 percent after it agreed to pay $75 million to settle a lawsuit brought by women who said they were sexually abused by the late businessman Jeffrey Epstein, who accused the German bank of facilitating sex trafficking.